People should only consider investing their pension in property if they have a fund worth at least £600,000, a pension consultant warned today.

New rules come into force on April 6 next year which will enable individuals to invest their pension in residential property for the first time.

Some commentators have predicted the change will lead to a boom in the buy-to-let market, while others think people will try to take advantage of the rule by putting a holiday home or even their main house into their pension fund.

But pension consultants Killik & Co has warned that investing in residential property is likely to only be suitable for the very rich.

It said the average pension pot was worth just £35,000, so even with pension funds being able to borrow up to 50pc of their value to invest in property, this still meant many consumers would have only £52,000 to spend on a property.

At the same time it claimed people should only invest a maximum of 20pc of their pension fund into residential property, and they should only do this if they were at least 10 years away from retirement.

Based on this advice and the fact that the average buy-to-let property costs £123,000, it claimed residential property was only a suitable investment for people with a pension fund of at least £615,000.

Even if someone planned to invest in a flat in Northern Ireland, which is the cheapest region in the UK in which to buy property, they would still need a fund of £413,065 to meet the 20pc asset allocation rule.

Malcolm Cuthbert, director of financial services at Killik & Co, said: "Whilst it is understandable that residential property as an asset class is something investors are very familiar with and excited about, the hype surrounding this is worrying.

"Our recommendation for those with typical pension pots is to seek a balanced portfolio through a mixture of investment funds.

"Investing in residential property through a pension is only for those lucky enough to have half a million tucked away, and only then if they don't plan to retire within the next 10 years."

The group said there were also a range of other factors people needed to consider before investing in property.

It said any property in a pension fund would be owned by the fund trustees, who could sell the property if they were not getting rental income from it.

At the same time the pension fund would have to pay stamp duty on the purchase and would be responsible for any repairs.

If someone put their holiday home into their pension fund they may also have to pay a benefit in kind charge to HM Customs and Revenue for any periods they stayed in the property without paying rent.